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Realty Income Corporation O

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The bet you're really making is that Realty Income keeps collecting monthly rent from thousands of single-tenant stores, the Dollar Generals, Walgreens and 7-Elevens sitting on street corners, and keeps raising its dividend every year the way it has for three decades. You're betting it can keep buying more of those buildings at rents higher than what it costs to borrow the money, because that gap is the only way it grows. Right now it is steady but slow: rent is up about 10% from a year ago after a big 2024 purchase, while what each share earns barely moves, because the company prints new stock to pay for the buildings. You pay about one and a half times what those buildings are worth on the books, the middle of where it has traded for twelve years and cheaper than rivals near 2.2 times.

Key data

Price$61.25
52-week range$55.86 – $67.94
P/E (ttm / 2028E)44.7x / 36.9x
Price / book1.4x

O · price with moving averages

Daily · 6MWeekly · 3Y
$48$53$58$63$68 Sep '23Apr '24Nov '24Jul '25Feb '26Sep '26 BID
EMAs82140

Source: market data.

The business

Realty Income owns the building, not the business inside it. It is the largest net-lease landlord in the country, with thousands of freestanding properties leased one tenant at a time to the kind of stores you drive past without looking: dollar stores, drug stores, convenience stores, grocers, a Wynn casino or two. The leases run long, often ten to fifteen years, and are triple net, meaning the tenant pays the rent plus the taxes, the insurance and the upkeep. Realty Income's job is to collect a monthly check and hand most of it to shareholders as a monthly dividend, which is the entire brand.

The moat is cost of capital. Because it is A-rated, huge and diversified across thousands of tenants, it borrows cheaper and issues stock more easily than smaller landlords, so it can pay up for buildings and still earn a spread. That advantage only works while the spread is positive. The whole machine is a bet that money bought wholesale can be lent to a Dollar General at retail.

Inside the complete Back of Napkin

  1. 01The business
  2. 02The numbers
  3. 03Management
  4. 04How it fails or surprises you
  5. 05Closing thoughts
  6. 06Methodology

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